A Tale of Multiple Apartment Markets
Florida and California are facing challenges while the Midwest and Northeast experience strong growth.
It has been the best and worst of times. Maybe, that summation is a bit dramatic. but it succinctly describes how different regions and cities have fared in recent post-pandemic years, according to Yardi Matrix’s recently released National Multifamily Report for June 2023.
Starting with the negative, Florida markets have seen “unbelievable growth,” during the pandemic but are now facing significant affordability challenges. Five of the 10 worst performing markets were in Florida in the Southwest Coast, Miami, Orlando, Jacksonville and West Palm Beach. California markets did not fare much better and have continued to try to find stable ground since the pandemic’s end. Several of its markets have seen month-over-month declines such as Metro Los Angeles, Sacramento, Eastern Los Angeles County, the Bay Area-East Bay, Orange County and the Inland Empire. The report also pushed forecasts lower for many larger markets in the West and Southwest.
Meanwhile, there is solid growth in multiple Midwestern and Northeastern markets Portland, Maine, and Scranton-Wilkes-Barre, Penn., both grew more than a full percentage point month over month. White Plains, N.Y. (a suburb North of the city), Detroit, Urban and Suburban Chicago, Manhattan, Milwaukee, Rochester, Central New Jersey and Syracuse all had asking rents grow more than 90 basis points (bps) from the previous month.
What’s in between these regions and reflecting more mixed results were Southern areas such as Texas. The smaller markets performed better than the larger ones on average, including Midland-Odessa, Tex., Lexington, Ky., and Macon, Ga., where asking rents grew more than a percentage point. Urban Atlanta, Charlotte and East Houston all saw their rents fall.
Overall, the search for affordability everywhere and the uncertain economy have made smaller markets more appealing since they’re more attainable for housing and other related needs.
The report also cautions that the year still includes five full months for rents in any of the regions to change course and turn positive—or negative. And there are so many reasons why either could happen. On the plus side, the jobs market is still strong even if slowing, wage growth remains strong, core inflation continues to fall, the higher than expected Gross Domestic Product has increased the chance the Federal Reserve’s effort to control inflation won’t push the country over the line into a recession and the still tight single-family home market continues to spur potential homeowners to switch to multifamily options, of which there are many.
But on the negative side, consumer confidence has waned, as have savings from the pandemic. How student debt plays out remains a big question, too.
Need a Lease Agreement?
Access 150+ state-specific legal landlord forms, including a lease.